Disillusioned by decades of financial crises, Argentinian voters surprised pollsters by electing Javier Milei as president last November. While the far-right libertarian, who promised painful shock therapy to fix the country’s ailing economy and has now been in office for 100 days, did achieve some early successes, he has struggled to implement the most far-reaching parts of his reforms.
Amid growing social tensions, the president is struggling to overcome hostile lawmakers to enact his radical austerity agenda.
“I want you to understand that Argentina is in a critical situation,” Milei said hours after being elected. “The changes our country needs are drastic. There is no room for gradualism.”
When Milei assumed office, inflation was hovering at 143 percent, poverty tallied at 40 percent and the government owed $110bn to external creditors. In part, his election was a rebuke of the ruling Peronist establishment, which had dominated politics in Argentina since 1983.
Days after his inauguration, the former TV pundit began implementing his radical plan – he devalued the peso by 50 percent, slashed state subsidies for fuel and reduced the number of ministries by half.
Though Milei has rowed back on campaign pledges to dollarise the economy and abolish the central bank, his initial moves have been welcomed by the International Monetary Fund (IMF). In January, the IMF signalled its support by disbursing $4.7bn in loans.
Argentina’s tilt to the hard right has also buoyed financial markets. Immediately after Milei’s election, Argentina’s international bonds maturing in 2041 rallied by seven percent. Rising bond prices typically reflect growing investor confidence in a country’s economic policies.
Critics, meanwhile, fear that President Milei’s broad-based austerity programme could trigger mass unemployment and tip the economy into an unpredictable and potentially turbulent future.
Emergency decree
On December 20, Milei issued an emergency decree aimed at amplifying his deregulation push from the previous week.
The mandate – which can only be used under “exceptional circumstances” – allows Milei to bypass Congress, where his party La Libertad Avanza holds just 38 of 257 seats (and seven of 72 seats in the Senate). As in the United States, legislation proceeds from the lower to the upper house.
The decree altered, or scrapped, 366 laws with the aim of privatising the country’s state-owned enterprises including an airline, media companies and the energy group YPF. The measures also pared back regulations on healthcare, housing and land ownership.
Elsewhere, the edict stripped away workers’ rights by, among other things, reducing maternity leave pay and severance compensation. It also allowed companies to dismiss workers participating in strike action.
Newly sworn-in President Javier Milei’s reforms have sparked protests [File: Rodrigo Abd/AP Photo]
The decree immediately sparked protests, and following an appeal from Argentina’s umbrella union, the General Confederation of Labour (CGT), a court suspended Milei’s worker reforms. On January 30, the court deemed Milei’s reforms “unconstitutional”.
“That was a loss for the government,” said Matias Vernengo, a former official at the Central Bank of Argentina. “Labour reform is a big issue for Milei.”
Then, on March 14, Argentina’s Senate voted to reject the emergency decree in a further blow to the president.
Many centrist lawmakers argued that Milei must present his deregulation reforms as bills in Congress. His plan’s survival now depends on negotiations with opposition representatives in Argentina’s lower house.
“I don’t think he’ll be able to convince Congress,” Vernengo said. “This will be problematic, as the public’s tolerance will depend on whether Milei can generate growth. That is the oxygen he needs to keep going. Having policies held up by lawmakers doesn’t look good.”
Reform bill
Days after he announced his emergency decree, Milei circulated a reform bill, known as the omnibus, to Congress on December 22. It proposed changes to four key areas of policy – tax, penal, electoral and the party system – which presidents cannot affect by decree.
In addition to spending cuts aimed at eliminating the deficit by the end of 2024, the bill sought to scrap proportional representation in Congress. It also proposed to cede legislative power to the president in areas such as energy and fiscal policy until 2025.
In opposition to what some viewed as power-grabbing measures, Argentinian workers, coordinated by the CGT, went on a general strike. Coming just 45 days after the president took office, it was the fastest strike action of its kind in Argentine history. Following days of tense debate, Congress approved a watered-down version of the omnibus bill on February 2, paving the way for a decisive vote in the Senate, where the legislation was set to undergo further changes.
Negotiations finally proved unsuccessful, however, after key measures were rejected by the ruling coalition. An embattled Milei went so far as to withdraw the bill on February 6, nullifying the vote from days earlier.
Rather than see his bill “shredded”, Milei told the Financial Times, he has chosen to wait until mid-term elections in late 2025, when he will try again with a new package. In the meantime, “there are other reforms which we can do by decree [without Congress]”, he said.
According to Graham Stock, an emerging markets sovereign debt strategist at BlueBay Asset Management, Milei looks set to rely on executive powers – as opposed to congressional consent – to try and implement his radical austerity plan.
“The executive has a lot of control over the expenditure side of the budget, including on discretionary transfers to the provinces, which have already been cut to force the governors to the negotiating table,” he said.
Skyrocketing inflation, poverty and tension among workers and unions have provoked high numbers of strikes and protests in recent weeks [File: Juan Mabromata/AFP]
Milei blamed regional governors for not backing his omnibus bill. In turn, he hit them with austerity, cutting a subsidy that provincial leaders use to keep public transportation costs down.
Stock told Al Jazeera that Milei “is now trying a different route to congressional majority”, by engaging in a fiscal tug-of-war with Argentina’s governors, who wield considerable influence over state representatives.
Still, questions remain over Milei’s ability to form an awkward pact with the country’s governors, many of whom are loyal Peronists. For Stock, “there is a path to a successful stabilisation and recovery of the Argentine economy, but it’s a narrow one”.
Analysts were caught by surprise after the government eked out Argentina’s first budget surplus in 12 years at the start of 2024. That was achieved by reducing payments to provinces, freezing budgets and not matching social spending fully for inflation.
Waiting game
According to Eduardo Barcesat, a professor of law at the University of Buenos Aires, Milei’s choice to attack the governors could backfire. “By taking a confrontational stance with governors, he’s made his position even weaker in Congress, especially with centrist legislators.”
Over the coming months, “the president will hope to galvanise support around his policies”, Barcesat said. “If shock therapy takes off and delivers results, especially around inflation, he believes he can increase support,” he said. “So far, this hasn’t been remotely achieved.”
Inflation rocketed to 276 percent in February, principally due to recent peso depreciations. Elsewhere, the poverty rate hit 57.4 percent in January, its highest in 20 years. Rising tensions among workers and unions have provoked high numbers of strikes and protests in recent weeks.
For Matias Vernengo, the former central bank official, “Milei is taking a huge gamble with the Argentinian people. If he doesn’t deliver results soon, I think that protests will start to turn violent. Things could get ugly.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
